Tag: property leaders

Property sector continues to show its resilience in face of latest lockdown

By Nkuli Bogopa, COO Property Management, Broll Property Group

Numerous office buildings are up for sale but this has been going on for a while. The fact that a number of retail centres are also on the market is evidence that listed funds are under pressure and offloading assets as a result. This is part of a larger cyclical process that has created a new wave of investors in a buyer’s market. Combined with favourable interest rates, movement is being generated in the sector, and there are new players in the game.

While retailers are largely in a hybrid mode, with some open and others closed, the third wave combined with the Level 4 lockdown remains a major cause for concern in the office sector, as people are more concerned about their health than ever due to the more transmissible Delta variant. The concern is palpable, and offices are obviously not the place where people want to be right now. Employers are also having to be guided by the regulations, with the lockdown dictating that we keep people out of office spaces.

This is obviously going to affect rental income. I have not seen any major shift in terms of the investor landscape. Many investors did the hard work last year in terms of rental adjustments and discounts, which was done with a long-term view, so this is still in place to assist our tenants. This was part of the lessons learnt from the initial hard lockdown.

No one has been prepared for the duration of the pandemic. We were all disrupted at the outset and the resultant concern about the impact of Covid-19, but the current uncertainty has been brought about by the fact that we do not realistically know when the pandemic is going to end. From an operational point of view, we did very well in collaborating with our broader stakeholders last year, including the government and the private sector.

The message from the President that we are to avoid enclosed spaces, keep our masks on and follow all of the necessary regulations and protocols remains paramount. In terms of the malls we manage, we are sanitising at a higher frequency than usual. People have become used to the fact that every retail shop has protocols to be observed. We are seeing a great deal of cooperation, and that should remain the norm.

Real estate service providers, such as ourselves, who are at the forefront of managing these properties are keeping up to date with the latest developments such as clean-air sanitising technology as an option to ensure our malls remain safe spaces. We are cognisant that this still does not remove the fear factor.

Both our super-regional and strip malls rely heavily on anchor tenants and the restaurant trade, which has now been shuttered again by the lockdown. Retailers will opt to remain open if not compelled to do otherwise. We are noticing a higher rate of Covid-19 infections among retail staff. Restauranteurs are reporting that takeaway or home delivery is not a viable option in terms of cost, so are rather opting to do with less staff. It is unsure how the current scenario will play out in the broader retail and clothing sector.

I have always maintained that in order to ensure a sustainable lifeline for these businesses, they require both an online and an offline presence. A good balance between these two is essential. The half-year results of some listed funds point to the encouraging fact that, in South Africa, the rural and township retail sector has shown the greatest resilience, and even a better performance when benchmarked against similar countries like Spain, where a latest study there revealed that consumers there prefer to come in-store rather than purchase online.

My message to tenants is that the collaborative spirit kindled at the beginning of this pandemic must prevail. Landlords and managing agents continue to evince extraordinary empathy for the economic hardship that has ensued, while professional organisations like the South African Property Owners’ Association (SAPOA) continue to lobby for municipal rates and taxes to be contained so that these additional costs do not have to be passed onto tenants. Collaboration between the government and private sector is vital. The government has to meet private investors halfway because ultimately our tenants are going to be the hardest hit. In this regard, it is sincerely hoped that the government will also consider relief measures for those sectors most affected by the latest lockdown measures, especially as this will have a knock-on effect on the entire economy.

Q&A with Elaine Wilson, Divisional Director, Property Intel, Broll Property Group

What do the statistics reveal about foot traffic in shopping malls since the move to an adjusted Level 4 lockdown?

As can be seen from the June figures, there has been a definite decline. However, this can be expected with the closure of food and beverage outlets and gyms. Looking at year-on-year for June, only regional centres show an increase from last year.

Has this changed significantly from the first hard lockdown?

Compared to April 2020, foot traffic increased in community centres by 51.2%, 68.2% in small regional centres and 111.7% in regional centres. This can be expected, as only essential services were open during hard lockdown.

How has buying behaviour changed as a result of lockdown restrictions over the past year-and-a-half?

Basket spend has increased, but this can be attributed due to rising prices. Food prices continue to skyrocket. Sunflower cooking oil now costs customers 30.3% more than a year ago, while white sugar has increased by 11.5%. Global food prices have also recorded their fastest growth rate in more than a decade.

The Food and Agricultural Organisation of the United Nations reported a 4.8% increase in May 2021, its highest value since September 2011. Impacted by the rise in fuel and electricity tariffs, these costs are set to continue to rise, impacting the entire economy and placing further downward pressure on consumer spending.

Online retail in South Africa has more than doubled over the last two years. It increased by 66% in 2020 at a value of R30.2 billion, compared to R14.1 billion in 2018. Currently, online retail represents 2.8% of total retail sales, up from 1.4% in 2018.

How is Level 4 expected to impact consumer confidence?

During hard lockdown, consumer confidence dropped. However, we have seen an increase in Q2 2021 to a six-year high. The new restrictions may lead to a similar drop in consumer confidence as last year, albeit not to the same extent.

Consumers remain under pressure and will remain so due to the UIF-Covid19 TERS relief programme coming to an end, rising fuel and electricity prices, food inflation and below-inflation adjustments to social grants. This will continue to put household finances of not only low-income consumers but consumers in general under significant pressure.

What are the latest statistics on trading densities?

Overall, trading densities decreased by around -6.4% after the outbreak of the pandemic. The highest drop in trading density is in entertainment (-56.1%), followed by services (-30.6%), with only homeware, furniture and interior showing positive growth (7.0%). Looking at the secondary retail categories, pharmacies and personal care increased by 4.8% and groceries/supermarkets by 5.1%.

Hobby stores and tattoo parlours showed the biggest rise in trading density at 10.0% and 28.5% respectively. It is interesting to note the rise in not only essential services, but also in home entertainment and in drive-throughs (6.0%).

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GBCSA and YIPA open doors to a sustainable future

In celebration of Youth month in South Africa, the Green Building Council South Africa (GBCSA) and the Youth In Property Association (YIPA) have signed a Memorandum of Understanding (MOU). This signals greater collaboration between the two organisations, which are playing a role in shaping the future built environment in South Africa.

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The MOU has a strong focus on knowledge sharing and events as the two organisations aspire to learn from each other and work together to ensure more sustainable buildings and practices in the local property sector. “We are truly looking forward to greater collaboration with the energetic members of YIPA,” says Lisa Reynolds, CEO of GBCSA.

“We’re really looking forward to working closer with the GBCSA. We have always been focused on finding new and innovative ways to increase the participation of young people in the property sector and this MOU does just that. The sustainability of our planet cannot be achieved without thinking differently about how property is developed and managed. This alliance with the GBCSA will ensure that young people in property become a part of the broader conversation and ultimately contribute to the security of our future,” says YIPA chairperson, Monedi Lefakane.

“Through this MOU we hope to boost awareness of environmental sustainability issues with the youth in the property sector and to provide support to bring about solutions together.”

GBCSA CEO Lisa Reynolds.

Because real estate contributes over one third of global emissions (IEA), there is growing pressure on the property sector to address climate change. The physical risks to property from the changing climate, and the reputational risks of inaction against climate change mean that more companies and governments are making commitments to tackle these issues.

The GBCSA is committed to working in this regard and to transform the South African built environment to a place where people and planet thrive. A well-informed and empowered youth, who are currently rising in the property sector, will be vital in making this transformation happen.

A strong focus of the MOU is that YIPA members will be entitled to preferential pricing for training with the GBCSA. Courses, both standard and bespoke, offered by the GBCSA provide great insight into sustainability and unlock opportunities for further collaboration and entrepreneurship.

“We can’t wait to welcome YIPA members into our training programmes. There is a world of green building and sustainability insight waiting for them. We are also eager to better understand the concerns of younger property professionals, particularly when it comes to sustainability,” says Jean Rodel, Head: GBCSA Academy.

Both YIPA and the GBCSA look forward to rewarding collaborations going forward.

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AECOM launches 2020/21 Africa Property & Construction Cost Guide

AECOM has launched the 2020/21 edition of their highly-respected Africa Property & Construction Cost Guide. This is the 31^st edition of the guide, published in conjunction with strategic partner, the Bureau of Economic Research (BER) at the University of Stellenbosch. The guide shares invaluable knowledge of Africa’s economy that can be leveraged to unlock investment opportunities across the continent in terms of construction and infrastructure development.

The guide notes that, although Africa remains one of the fastest-growing continents, growth is expected to be moderate. The implementation of sound macroeconomic policies has meant that Africa’s economies have generally remained resilient. Countries such as Ethiopia, Ghana and Côte d’Ivoire are three of the fastest-growing economies globally in terms of increased GDP. Africa’s growth is further bolstered by several East African countries contributing collectively through increased exports and cross-border trade to boost regional growth.

There is an ever-growing need to finance infrastructure on the continent. Several countries are now prioritising this after realising the importance of industrialisation to maintain growth in their economies but also recognising the need to diversify through the exportation of goods and services. This has consequently created the jobs needed for a burgeoning younger population. A developing industrial sector on the continent requires more infrastructure investment, particularly in power, water and transportation services, which are already over-stretched.

An increased oil price and the stabilisation of commodity prices have helped strengthen the forecast for GDP growth on the continent. Predictions of collective growth are around 3% to 4% for 2020/21, with individual countries increasing by as much as 7% to 8%. Sub-Saharan Africa is seeing steady growth in the infrastructure and construction sectors, as well as in East and West Africa. Important here is the signing of mega gas deals in Mozambique following favourable environmental impact studies and subsequent government approval for parts of Liquefied Natural Gas (LNG) development contracts.

This is expected to create thousands of job opportunities, impact significantly on Mozambique’s GDP and create collaborative opportunities for neighbouring countries.

Recovery after the easing of lockdown levels has also been slow. However, productivity is anticipated to return to normal levels as the industry acclimatises to a ‘new normal’. In this regard, AECOM has reprioritised how they work as a business, how they interact with their teams and clients and how they strive to retain business agility. “This is all in order for us to survive what has undoubtedly been one of the toughest years we have endured in the last decade,” concludes Narainsamy.

For further information about AECOM’s 2020/21 Africa Property & Construction Cost Guide and to download a copy, visit:

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Building the next generation of property leaders

Introducing new real estate podcast, Fitzanne’s Property Exchange

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